John Stumpf, Chairman and Chief Executive Officer
Yes. You know, the number that the last time I have seen from them is $1.1 trillion to $1.2 trillion. Yes, it could be higher, based on those things. As I mentioned in my comments, with what was done recently on FHA and some of the things that GSE are doing, and if rates stay low or are favorable, surely we could see more activity, and, you could see actually more activity on both the refinance side and the purchase money side. We’ll just have to see how that goes, but, I don’t think there’s been any reduction or any update on those numbers from MBA, but it could be the higher end of that range.
Erika Najarian, Bank of America
Got it. And on the flipside to that, you mentioned that you did get more clarity on LCR and HQLA with regards to being more aggressive with regards to liquidity deployment, but John, you have mentioned several times that absolute level of rates has dictated your cash deployment or liquidity deployment strategy. As we look out into 2015, was the clarity around the rules enough to make you a little bit more aggressive about deploying your liquidity into earning assets, or is it going to continue to be largely rate dependent?
John Shrewsberry, Chief Financial Officer
It’s a good question. I mean, it’s substantially rate dependent at this point and loan growth dependent as well because that’s the first call on all of our available liquidity – is making loans available to customers. But if we believe that we are in a lower for longer long term rate scenario, separate that from policy rates for a moment, but just thinking about the 10 year and mortgage rates et cetera – at the margin that probably emboldens us a little bit additionally to convert what’s cash today into duration over the course of the year.
John Stumpf, Chairman and Chief Executive Officer
We still have a lot… we have checked the billions available. So, I mean, there’s just a lot of liquidity on the sheet.
Erika Najarian, Bank of America
Understood. And just a quick follow up. We appreciate the color that you gave in terms of the impact of energy. Have there been a lot of questions from investors in terms of what it would take for banks to adjust its qualitative reserve to reflect lower energy prices? I was just wondering if that’s how Wells Fargo does it, or do you really look at the reserve at least in terms of your energy commercial exposure on a name by name, loan by loan basis?
John Shrewsberry, Chief Financial Officer
In the case of commercial and corporate loans, it’s absolutely, some of the parts of name by name basis and the risk rating on each loan. We have hundreds of customers in the energy business. They are in the EMP or upstream part of the upper market. There are midstream companies. They are services companies. We have the largest team in this area, very long tenured, been through several cycles and we are working with growing customers – customer by customer and working through each situation to figure out what this drop means to them based on their leverage, based on their hedging profile, based on their assets, based on their management capability – and that will lead to risk rating changes on the loan by loan basis or name by game basis as time unfolds. And it’s that activity that would lead to changes in our reserving posture for the portfolio.
John Stumpf, Chairman and Chief Executive Officer
We don’t want to minimize this but this is the nature of that business. If you go back just six years –we’ve had $30 a barrel oil and we’ve had $140 a barrel oil. We’ve seen gas, for example, natural gas go from $6 – $7 MCF to $2 and some change today. And that’s just part of that business.
John Shrewsberry, Chief Financial Officer
On the EMP side of that portfolio – those tend to be reserve based loans asset-based loans with a very interactive approach between the bank and the borrower in terms of determining the value of the collateral and then re-margining the low down to reflect changes in the value of the collateral. And of course that’s at our discretion, we have our own engineers and we’re very engaged in that process, so, all of that ties into what the future reserving needs or requirements are for that portfolio. And as I said, nothing obviously has revealed itself yet and there’s nothing in the 4th Quarter specifically for that.
Erika Najarian, Bank of America
Got it. Thank you for taking my questions.
